How The Gig Economy Hurts Freelancers

Full time jobs are disappearing at alarming rates, across dozens of industries. Some are being replaced by robots, but more are being replaced by part time positions and freelance gigs. Almost all the job growth in Canada in 2016 was in part time jobs, and the numbers are similar all around the world.

As a freelancer by choice, people often think this is good for me. After all, they say, isn’t there more work for you than ever before? Isn’t this the kind of economy you thrive on? It’s entirely based around the type of work you do!

When I started freelancing (and I was still in school), I had a similar attitude. I believed the gig economy would work in my favor. I also believed that, as a writer, I was better prepared to enter the gig economy than most of my peers.

Only one of those things turned out to be true. I am more at peace with the freelance cycle of feast and famine than many of my peers, both because I chose it and because I grew up in poverty. But I’m not really better off when it comes to finding work.

Today I would like to show you why.

Everyone is competing for the same gigs

This is by far the biggest reason why freelancers don’t benefit from the gig economy. Millions of people who would prefer full time jobs are forced to freelance or get part time jobs. These are people with doctorates, with several years or even decades of work experience, with proven expertise in their field. People who by all rights should have—and would love—full time jobs with excellent salaries and benefits.

Instead, they end up with a choice: part time work that often pays minimum wage, or freelance work that pays (a little bit) more. All of those people are put into direct competition with freelancers. And younger freelancers like myself often don’t have the experience to compete with these people. We rely largely on raw talent/skill and a willingness to learn. Sometimes it works, sometimes it doesn’t.

This problem is also directly related to the next problem:

Non-freelancers charge lower rates

People who are only freelancing because they need to survive between full time jobs rarely understand the full value of their freelance work. To them, a job sounds good if they’re getting a similar hourly rate to what they earn at their regular jobs.

Unfortunately, when you’re actually trying to build a long term, successful freelance business, these rates won’t cut it. As a business owner, you have to cover your own health insurance and pay for your own vacations. In some places you’ll also pay a higher tax rate, even if you work alone.

You also can’t expect to bill 40 hours every week. There’s a lot of unpaid work—administration, website updates, marketing—you need to account for. If you want to bill 40 hours a week, you’ll be working 60. Or you’ll have frequent feast and famine cycles, including long periods with no income whatsoever.

In other words, $15/hour isn’t going to cut it for very long. But many people who only plan to freelance briefly (and many starting freelancers), charge $15/hour, or even less. Many employers now only offer $15/hour. These jobs come in droves, forcing people to hunt through massive lists of poorly paid jobs/markets to find a handful of worthwhile jobs. They’re most prevalent on sites like Craigslist, but many even post on high quality job boards like the ProBlogger board.

You can’t live on one job anymore

By its nature, freelance work means working for a variety of people. Every person forced to turn to freelance work takes several jobs away from people who actively want to freelance, not just one. Lower rates mean each person needs to take even more jobs.

The cost of living has also risen by leaps and bounds, especially if you live in a city. In Toronto, where I live, the average rental price for a one bedroom has gone up by almost 30%.

In many American cities the average rent for a one bedroom is over $1,700. If you’re only making $15 an hour, even if you can bill 40 hours a week, that leaves you with only $900 for literally everything else you need.

Many freelancers also like to keep part time jobs so they don’t have to worry about a feast and famine cycle, but applying for those jobs means competing with even more people who would prefer full time work. You can’t live on a part time job in most places either, so people take two or three or four of them.

Conclusion

More freelance and part time jobs are theoretically good for someone like me, but it doesn’t actually work out like that in real life. Every person forced into freelance work is just as bad for me as it is for that person. The gig economy hurts everyone, except the business owners using it to get out of paying for vacations and benefits.

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Dianna Gunn is a freelance writer by day and a fantasy author by night. Her debut YA fantasy novella, Keeper of the Dawn, is available now through The Book Smugglers Publishing. She also blogs about books, creativity and life.